AUD/USD Forex Signal: Bears Eye 0.6800 Amid China-Taiwan Worries – 08 August 2022
The pair will likely continue falling as sellers target this support at 0.6850.
Sell the AUD/USD pair and set a take-profit at 0.6850.Add a stop-loss at 0.6950.Timeline: 1-2 days.
Set a buy-stop at 0.6945 and a take-profit at 0.7050.Add a stop-loss at 0.6875.
The AUD/USD price retreated on Monday morning, continuing the spectacular plunge that happened on Friday last week. The pair crashed to a low of 0.6875, which was the lowest level since July 21st. It has crashed by more than 2.50% below the highest point this month.
China and Taiwan Worries
The Australian dollar declined slightly after the latest China trade numbers. According to the country’s statistics agency, China’s exports rose from 17.9% in June to 18.0% in July. This increase was significantly better than the median estimate of 15.0%. It was also a surprise because of the challenging macro environment the world is in.
At the same time, China’s imports rose from 1.0% to 2.3%. As a result, the trade surplus jumped from over $97 billion to over $101.26 billion. Analysts were expecting the country’s trade surplus to narrow to about $90 billion. These numbers are important to the Australian dollar because of the strong ties between Australia and China.
The AUD/USD dropped as worries to the ties between the US and Australia and China worsened because of the ongoing tensions on Taiwan. During the weekend, China’s government officials warned Australia against interfering on the issue. China’s military continued its drills near Taiwan in response to last week’s Pelosi’s visit.
Meanwhile, the pair also declined sharply as investors reacted to the blemish-free jobs report from the United States. Data by the Bureau of Labor Statistics (BLS) revealed that the country’s economy added 528k jobs in July after it added almost 400k jobs in the previous month. At the same time, the unemployment rate dropped from 3.6% to 3.5%.
The next major data to watch will be the upcoming US consumer inflation data. Economists expect the data to show that inflation dropped from 1.3% in June to 0.2% in July, translating to a year-on-year gain of 8.7%.
The AUD/USD pair made a bearish breakout below the lower side of the ascending channel last week. The sell-off then continued after the US published strong jobs numbers on Friday. On the four-hour chart, it has moved below the 25-day and 50-day moving averages and is slightly above the important support at 0.6850, which was the lowest level on June 14th,
The pair will likely continue falling as sellers target this support at 0.6850. A drop below that support point at 0.6850 will open the possibility of it moving below 0.6800.
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